Greek austerity vote forces Europe to confront bigger issues than economics

REUTERS/Yannis Behrakis
Greek voters Sunday rejected further economic austerity measures.

The immediate result of Greece’s vote Sunday against more austerity is going to be more of what Europe has endured in recent weeks: more drama, more shouting and finger-pointing, and more officials scurrying to Very Important Meetings at which nothing really happens.

But cooler heads eventually will prevail and something substantive will occur. When it does, regardless of whether Greece remains in the euro zone, the deal it makes with its European Union partners will not only be about the financial questions that are driving everyone mad. It probably will take into account geopolitical issues like refugees and relations with Russia, and also how it plays in Madrid.

From the Greek side, it’s all reasonably clear. Powerful EU figures may have warned that the referendum was in effect a vote on whether Greece wanted to stick with the common currency — and swallow more of the medicine the EU has been prescribing for the past five years. But to the majority of Greeks it looked different.

Even though polls had indicated a very close vote, Greeks appear to have bought Prime Minister Alexis Tsipras’ argument that a ‘no’ vote would help him negotiate better terms.

Greece wants to stay in the European Union, and stick with the euro — under better terms.

When they finally decide whether to cut Greece more slack, German Chancellor Angela Merkel and other EU officials will have to take into account a number of other factors.

According to this analysis, no matter how frustrated they are with Greece, Merkel and other EU leaders will want to maintain the relationship to help stabilize the shakiest part of Europe, its southeast corner.

They’ll specifically want to consider Greece’s connection to two of the biggest headaches policymakers are facing: relations with Russia, and the flood of Middle East and African refugees heading for Europe.

Russia looms

Since his election in January, Tsipras has visited Moscow twice — the last time in mid-June. Russia and Greece share a bond through history and culture: Both are Orthodox Christian countries. Tsipras has criticized EU economic sanctions imposed on Russia because of its meddling in Ukraine.

He did not stand in the way of a renewal of the sanctions last month, a decision that has to be unanimous. But it’s relatively easy to see that an antagonistic Greek government could cause problems for EU policy toward Russia, and provide Russian President Vladimir Putin an opening to begin chipping away at the sanctions.

Refugee crisis

The Greek defense minister caused an uproar earlier this year by threatening to flood Germany with refugees, including Islamic State terrorists. Greece since backtracked, but the central fact remains: Greece is along one of the most popular routes for asylum-seekers and economic refugees heading for Europe, and Germany is among their most popular destinations.

Geographically, Greece is within easy reach from the chaos gripping Syria, Iraq and other Middle East countries.

For the last several years, the route across the Mediterranean Sea from Libya to Italy has gotten the most attention. How to handle the refugees is a hugely divisive issue within the EU. European officials were embarrassed by their weak effort to patrol the Mediterranean after a couple of boats sank within days this spring, killing more than a thousand people.

Historically, the number of people who use a particular route tends to vary, depending on factors including border security. European officials already dealing with a flood of refugees won’t want to have Greek border guards look the other way.

Members of the club

Then, there is the issue of how the bargaining with Greece looks to other EU countries. The critical one appears to be Spain, and the question increasingly is about what it means to be a member of the club.

How much control over your internal affairs do you need to surrender? And if the answer turns out to be not much, then what exactly does it mean to be a member?

While Greece a relatively small country, Spain is the fourth largest in the EU. Voters there seem equally fed up with austerity, and a movement with views very similar to Tsipras is on a roll. Officials of the movement, Podemos, were quick to praise the result of the Greek referendum.

Here are the words of its leader, Pablo Iglesias, at a rally prior to the vote:  “In my opinion, the problem isn’t Greece, the problem is Europe, Germany and the IMF are destroying the political project of Europe. … The IMF and the German government are attacking democracy.”

National elections are coming in Spain. But in the meantime, candidates linked to Podemos won the mayors’ offices in six major Spanish cities in May, one factor prompting this piece by Mike Gonzalez of the Heritage Foundation under the headline: “Spain’s Podemos Could Make Greece Look Like Child’s Play.”

So when EU officials craft a policy for Greece, they’ll probably be thinking about Spain, as well. And maybe even Britain, where Prime Minister David Cameron has promised a vote on whether to remain in the EU.

Their countries are far different. But just like Tsipras, Cameron says he wants to stay in the EU — under better terms.

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Comments (6)

  1. Submitted by Dennis Tester on 07/06/2015 - 12:33 pm.

    The situation in Greece

    and the one forming in Spain only serves to remind us that democracy and freedom are not the same things.

    When the people can vote themselves a share of the national treasury, democracy has devolved into mob rule, a situation also forming in this country.

  2. Submitted by John Appelen on 07/06/2015 - 12:43 pm.

    In Other Words

    The Greeks want to live good and have someone else pay their bills.

    “Prime Minister Alexis Tsipras’ argument that a ‘no’ vote would help him negotiate better terms”

    Now if Europe is the Social Democracy model that many of the commenters here would like us to follow. What do you think of this mess?

    • Submitted by chuck holtman on 07/06/2015 - 02:29 pm.

      “Europe” is not a “Social Democracy model.”

      “Europe” is a collection of states at different levels of economic and institutional development. Those on the left were, and always have remained, skeptical of the wide scope of the European Union because currency unification and free capital flows among societies at different levels of development always result in the extraction of wealth from weaker states by stronger ones. Thus, the European Union, free trade agreements, payday loans and furniture rent-to-own are all of a kind. Pervasive corruption (at least of the economically non-productive kind) at the higher levels of the Greek government is just one feature of an underdeveloped society that made Greece unfit to compete with Germany, but German capital (and the IMF) knew that going in and needs to put on its big boy pants and accept its losses now. The ordinary people in Greece shouldn’t have every last element of their social and economic well-being wrung out of them so that German capital can be made whole.

    • Submitted by RB Holbrook on 07/06/2015 - 02:42 pm.

      Three Points

      First, Greece is part of Europe, but it is not “Europe.” There is something of a distinction there.

      Second, the ordinary people of Greece are the ones being asked to take the hit for the irresponsible policies of their governments, and for the profligate lending practices of foreigners. It was not sane policy to, say, promise workers early retirement, but it was done. Many workers spent their lives working under that assumption. Did they live well, or even good? Debatable. Now, they are told that the promise is off, they can’t get what they thought they working for, and that the country’s foreign creditors must be protected above all else. Gosh, why would they be bitter over that arrangement? All they are being asked to do is surrender sovereignty and live under a crippling economic regime for the foreseeable future (austerity has done so well for them so far)–why would they object?

      It may be hard to understand, but the people who are suffering the consequences of poor decision making are not the ones who made the decisions themselves. Did they elect to borrow money? In an indirect fashion? Did they purposely institute an inefficient and corrupt revenue system that undercollected taxes, especially from the wealthy? Probably not. Did they decide to lend the money in the first place? No. I know ordinary working people don’t merit much sympathy (after all, it’s their choice to stay in the country where they were born, and not emigrate to an uncertain future), but the consequences are more real for them than they are for the technocrats in Frankfurt.

      Third, Germany is the last country in Europe that should be kvetching about other countries not paying their debts.

  3. Submitted by Jim Million on 07/06/2015 - 01:28 pm.

    Spot On

    Most Americans know little and care less about Europe, except as a vacation land and vendor of some pretty good food and beverage products. Thanks for this nicely outlined guide to realities of inter-dependence, manipulation and mandate.

    If any Americans recall the once pending disaster of default by Cyprus, they should understand the present reality of Greece. Over the weekend, Cyprus offered financial assistance to Athens.

    The specter of Russia does always loom larger these days in the EU vision of Europe. As Russia has clearly demonstrated its intent to pick its way around the edges of Fortress Europe, a Russian counter-offer to Greece is not fantasy. And that scares EU bureaucrats far more than the Baltic debacle.

    In the meantime, Cameron’s promise of EU referendum seems more timely than thought a few months ago. As the EU member that refused to adopt the Euro, retaining its sovereign Pound Sterling currency, Britain’s new government with a weak Labor Party bifurcated by a rising Scottish National Party, may gain the most of this test of German/French political will. Cameron’s Tories will call the shots in all things related to their own EU intrigue. We can now be certain that Brussels will keep the buttons on their foils as they continue to fence with Britain over all of that.

  4. Submitted by Andrew Jenks on 07/07/2015 - 11:22 am.

    Good Commentary

    Thanks

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